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Cost Cutting Top of Mind for Playboy CEO

Company reports $23.5 million net loss through first nine months.



By Jason Fell
11/05/2009

In order for the print edition of Playboy magazine to break even or be profitable, “bolder steps are required,” recently-named CEO Scott Flanders said during the company’s third quarter earnings call Thursday morning. The company’s print/digital group reported a $900,000 loss through the first nine months compared to a $3 million loss during the same period in 2008.

Overall, Playboy Enterprises reported a $23.5 million net loss through the third quarter, down from a $13.6 million net loss last year.

During the call, Flanders declined to offer specifics about the “bolder” steps, but said three things are sure: he’s creating a new “corporate culture” that enables his staff to think and perform across divisions; he’s working on a joint venture in the development of a new business model for the company; and is strongly considering further cost cutting initiatives.

Flanders said he expects to announce those developments before the end of the year.

Last month, the company said it would reduce its rate base to 1.5 million from 2.6 million, and will combine its January and February issues into one, meaning it will publish two issues total during the first quarter next year. This summer, Playboy published a singular July/August issue that saved the company roughly $1 million in printing, paper and other costs. Those savings were offset slightly by expected declines in ad and circulation revenues as well as higher editorial costs, Flanders said during the earnings call.

Licensing, meanwhile, remains Playboy’s most profitable business, he said. The division reported a net profit of $15.9 million through the first nine months, down from $19.4 million during the same period last year.

Flanders said he expects to report a 38 percent decline in ad pages during the fourth quarter this year.

By Jason Fell
11/05/2009




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